Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.
For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.
For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.
As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.
While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.
A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.
Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Liechtenstein can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Liechtenstein, you have to:
If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Liechtenstein.
An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.
An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.
Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.
At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.
Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:
Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.
Paying employees in Liechtenstein is not the same as paying workers in your own country. Employees have to be paid using Liechtenstein’s employment and payroll standards.
This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.
Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.
After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:
One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.
Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.
Outside of EORs acting as the full admin employer, many also provide remote payroll.
For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.
We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.
The standard working week in Liechtenstein is:
In Liechtenstein, additional working hours are defined as working hours that exceed the maximum working hours per week.
Overtime must be compensated with leisure time or paid with an overtime bonus of at least 25 percent.
Liechtenstein employees expect to be paid monthly.
Bonuses are common in Liechtenstein. Some industries normally pay a 13th month salary.
In Liechtenstein, employees who work a five-day week receive 20 days of paid annual leave, or 24 days for employees who work six days per week.
Employees who are 20 years old or younger are entitled to a minimum of 25 days per year.
Employees inform their employer when they wish to take time off, and the employer schedules the leave.
The employer is obligated to take the employee’s requests into account and may only reject a request if the needs of the business require the employee to be at work.
The employer must pay an employee for unused vacation time when the employment relationship ends.
There are 15 public holidays.
The employer is required to pay half the costs of this insurance and may assume more than half of the cost.
Employees may also take up to three days of leave to care for a sick household member.
Employers in Liechtenstein are required to purchase insurance from a government approved insurer to cover the costs of the per diem sick pay.
If the employee will take a sick leave, whether for themselves or a household member, an employee is obligated to notify the employer and provide a medical certificate.
Female employees are entitled to 20 weeks of maternity leave, of which 16 must be taken after the birth.
Residents who are not employed may be able to receive a maternity benefit in an amount based on the resident’s spouse’s salary and number of children.
The father in liechtenstein may use the parental leave.
Employees are also entitled to take an unpaid parental leave of up to four months.
Parents seeking to take parental leave must notify the employer at least three months in advance.
The employer may require that the parental leave be taken at a different time than requested due to the needs of the business.
Employment relationship may be terminated by the employer as well as by the employer at any time without specifying grounds.
Adherence to these notice periods is not necessary if the employee or employer has good cause to terminate the employment relationship without notice.
If both the employee as well as the employer agree, the employment relationship may also be dissolved with immediate effect by means of a so-called severance contract.
Employees in Liechtenstein, is between one and four weeks.
Employees receive four weeks of severance pay for each year worked if dismissed due to economic reasons.
Probation period is 1 month.